rd80 (97.76)

July 2007

0

There’s been a lot of discussion on CAPS recently about the merits of under perform picks, particularly for bulletin board and pink sheet stocks. The argument against ‘trash’ or ‘dumpster diving’ picks is that it skews CAPS players’ ratings and results in more weight being given to players who make those picks. It’s also not representative of real investing since these stocks usually can’t be shorted. [more]

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This morning’s e-mail had an important investment opportunity from streetinsider.com. An analyst who is on the way to ‘becoming the greatest oil & gas stock-picker of all time’ was letting me in on Sun Cal Energy (SCEY), trading under $4.25 on its way to $55! What a deal! [more]

Recs

2

All Friday the 13th myths aside, this was a very good week for me – the two biggest stock holdings in my real portfolio are CSCO and CVX. Cisco seems to have found some buyers in the last couple weeks. IMHO, with its solid growth rate, dominant market position and huge cash balance CSCO could easily trade up over $35 by year-end. And Chevron has been setting new high after new high the past couple of weeks. Maybe some big money managers took notice when Juan Pablo Montoya put the Texaco car in victory lane at Sonoma a few weeks ago. More likely sustained high oil prices and a positive interim 2nd quarter update are behind the run-up. CVX is starting to look a little pricey based on the PEG ratio, but I suspect the analysts don’t have current oil prices in their models. If you’re considering either of these, I’d look for a bit of a pullback before buying in – although you may not get one. I’m leaning towards riding this run a bit longer, then taking some profit and scaling these two back to more of an equal weight. [more]

Recs

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Friday was an interesting day, made an underperform call on Local.com (LOCM). This is one of those stocks that's fun to play in CAPS, but has a risk/reward profile similar to playing blackjack or roulette, i.e. real money shouldn't be played unless you know what you're doing and can afford to lose. They recently won a patent for a system that allows context based advertising for 411 calls and the stock ran from something like 4 or 5 bucks to 13 in less than a week. The bull case is the technology creates lots of new revenue from licensing and/or makes them interesting to Google, Microsoft, et. al. The bear case is any buyout premium is already in the stock and the patent isn't that much different than stuff Google and others are nearly ready to put on the street. More commentary here, here, and here. The price action was pretty dramatic on Friday, to say the least - at various points during the day the stock was down 10% , up 10% and ended up 5 cents below the open. [more]